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News

iPhone Proves to be Double Edged Sword for AT&T

 

AT&T activated some 2.4 million iPhones during its second fiscal quarter, and also saw a 12.5 percent increase in operating expenses thanks to the iPhone 3GS launch. The company's net income was down year-over-year, too, thanks in part to iPhone-related expenses including subsidized pricing.

Apple's U.S. iPhone partner showed a net quarterly income of US$3.2 billion, down from $3.8 billion in the same period last year. Despite the financial hit AT&T is taking now for the iPhone, the company expects to recoup the money through iPhone data subscription plans.

AT&T also noted that about a third of its subscribers are iPhone users and its average revenue per subscriber is up at $60.21 a month, while the number of subscribers it loses is down to 1.09 percent.

The iPhone, however, isn't the only factor that pushed AT&T's quarterly income down. The company also blamed the shrinking number of wired service customers along with what it is calling a "challenging" economy.

While the iPhone has helped drive AT&T's mobile phone subscriber base up close to 80 million, it could help strip customers away, too, if Apple decides to end its exclusive deal with the carrier. If that day comes, AT&T may have a hard time seeing a return on its investment if customers abandon ship for other carriers.

Despite rumors that Apple is negotiating with Verizon, AT&T's exclusive distribution deal is safe -- at least for now.

 

3 comments from the community.

You can post your own below.

Paul said:

$3.8B is actually up from $3.2B.  Are the figures switched?

   Quote

deasys said:

Apple’s U.S. iPhone partner showed a net quarterly income of US$3.8 billion, down from $3.2 billion in the same period last year.

Huh?

   Quote

Jeff Gamet said:

Yep, I accidentally reversed AT&T’s figures. They’re fixed now.

Jeff

   Quote

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